Morgan Stanley Says Nvidia Just Regained Its No. 1 Spot. Why NVDA Stock Is Back on the Throne.

Following Morgan Stanley's move to move on from Micron as its top pick, I had made a case in my latest piece as to why, in the larger scheme of things, nothing dents the bullish case for the memory chip major. However, what about their latest favorite, the world's biggest company, Nvidia (NVDA)? Well, the rationale for the firm's latest stance on the chip major is rather tactical—they believe that the current demand scenario for memory is “exceptional” and things will get back to normal soon. The consequent beneficiary: Nvidia, as the chip giant is a consumer of memory chips on a large scale, and lower prices for the same will only be a good thing.

However, what the Jensen Huang-led company has proven in recent years in its journey to become a $4.4 trillion market cap mammoth is that it has become almost indispensable in the realm of AI. A testament to that is that even amid overblown fears of overvaluation among AI stocks, shares of Nvidia are up 56% over the past year. Though at first glance and in relative terms, NVDA does seem to trade at elevated valuations, it appears that the market remains convinced about its prospects. Why? Let's find out.